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Review: Upside of Inequality by Edward Conard

Having much to offer, this book is nonetheless uneven. Despite its title, it tells the reader less about the upside of inequality than it disputes popular explanations for it and their associated remedies. Such critiques, what Conard calls “myth debunking,” offer much insight, but the book would have done more by living up to its billing and explaining directly how inequality can benefit society, a difficult task, to be sure, but not impossible. The closest Edward Conard comes to his title’s promise is with a compelling, if cursory explanation of inequality’s roots in the current economic climate, useful, to be sure, but not the benefits of inequality. For much the same reason, his proposed remedies fail to satisfy completely. Excepting the most casual of readers, many will want more to feel that they have a handle on the material.

As indicated, Conard is good on attack. Criticisms of others’ arguments constitute the bulk of the book. I count 178 of its 268 pages of text. He makes powerful cases against those who: dismiss the role of incentives, claim that success is largely unearned, assert that investment opportunities are in short supply, argue that progress hollows out the middle class, and decry the decline in economic mobility. He makes a powerful case why the popular enthusiasm for income redistribution will hurt recipients as well as society generally, hence the book’s subtitle. Conard is less convincing but nonetheless provides considerable insight when demonstrating how educational solutions will likely fall short of needs.

Bookending the myth debunking are up front an able description of the reasons why inequality has become more severe and later a recitation of what he sees as the best responses. Of these two efforts, he is best at explaining what has happened, showing how immigration, trade, and technology together boost the earning power of successful innovators while at the same time hold down the average worker’s wages, particularly the less skilled. He stretches this analysis to argue in the second bookend that innovators, because they take huge risks, deserve every penny of their outsized returns and that using high taxes to deny them those returns not only has a moral taint but also hurts society by discouraging people from making such valuable contributions. Rather than penalize these people, he would cut corporate taxes drastically. Because he identifies immigration and trade as major forces holding back the average worker’s wages, he would take radical, and this reader thinks dubious steps to rid the country of its trade deficit and emphasize “ultra high-skill” over low-skill immigration. He sees any direct support for workers, including a middle-class tax cut, as poorly suited to his overriding growth agenda.

Arguments as they unfold go down easily and smoothly. Still, his analysis and the remedies he draws from it would carry more weight, if from time to time he had interrupted the smooth flow of his prose to deal with subtleties and apparent contradictions. He fails, for instance, to address the full impact of technology on wages. He alludes to it several times as a factor along with immigration and trade, but it seems to drop out of the picture when he gets to his solutions, perhaps because it would complicate his otherwise unreserved enthusiasm for innovation, particularly of the technological sort. No one expects an answer for every nuance, but given his title, he might have tried harder to square this particular circle. In a similar way, he frets about how the retirement the baby boom will absorb so many financial resources that it will crowd out industry’s needs for capital. Yet, earlier in the book he denies that economic progress depends any longer on capital spending. Both points have validity, and there are ways to square this circle as well, but Conard makes no effort to do so.

A different conflict emerges in his treatment of education. He emphasizes ultra-high skilled immigration out of a kind of despair that American education can produce the needed talent. His criticism of education, however, rests on the narrow foundation that it has so far failed to raise test scores. It is strange in a writer so willing to show skepticism of other analysis that he does not even pause to consider the validity of the tests on which his conclusion so heavily depends. One would think that a man who touts innovation so thoroughly would look to encourage innovation in education or even testing. One other such oversight, a subtler one, troubled me several times as I read. He writes as if technology were the only avenue of innovation. Without trying in the least to detract from technology’s importance, history shows that it is never the whole game. Conard, in his hymn to forward-looking risk taking, might have done well to consider that the next wave of innovation might occur in other areas and need very different talents. It would ask too much, of course, to expect him to identify those areas but not too much to concede that they might exist. His constant return to the existing paradigm of technology makes the book at times seem oddly backward looking.

Conard’s style tends to compound these problems. It is pleasantly conversational, which makes his book readable. But in conversation one is more willing to let oversights slide than in a written discussion. More than once I thought to look at the end to see if he used the old lawyer’s disclaimer: “dictated but not read.” For the same reason the effort becomes unnecessarily repetitive. In an analytical book like this, it is reasonable to revisit arguments, required, in fact. But he might have done well in such instances to offer something more than a simple repetition of what he had already said, additional data, for instance, anecdotes to illustrate his points, perhaps a pause to deal with those subtleties and seeming contradictions. The closest he comes is to quote studies that support his points. Even there he slides by with a simple reference instead of helping the reader gain an idea of how the quoted study reached its supporting conclusions.

If one wishes Conard had dealt with these weaknesses better than he has, the book still teaches a lot and provides considerable insight. It might leave the thoughtful reader with the feeling that he or she does not quite have a handle on the matter and needs to read more, but that is not a bad thing. Conard has given us all much to consider.